Anyone can understand that concept — best to avoid a slow-motion financial suicide. The other biggie is how to achieve net-zero emissions while maintaining profits and, crucially, the hefty dividend. It accounts for fully 7 per cent of the dividends paid by FTSE companies. But with a yield of 10 per cent, the dividend seems unsustainable, and BP is wary of taking on new debt to finance the payments when the price of oil is so low.
The write-down was triggered by the begrudging acceptance of two related realities. The second was that low prices and the global decarbonization effort mean that some oil reserves may never be pumped — the dreaded stranded asset scenario. To oil companies, oil left in the ground is like a parked passenger jet: Neither pays the rent.
The forecast for American gas was cut by 31 per cent. So is BP launching a black-to-green transformation? The company has a history of talking green and doing little to nothing about it.
The net-zero pledge was easy. It came with almost no details or milestone commitments. BP will no doubt mill through three or four more executives before , meaning Mr. Looney will not take the blame if the goal is missed. Job No. In an e-mailed response to questions from CNBC, he touted the company's involvement in biofuels and ethanol. He expects renewable energy to continue to grow in importance for company in the decades to come.
In its most recent assessment of the global energy market, called the Energy Outlook, BP frankly acknowledged the growing importance of oil and shale gas development. The company said both segments would account for "almost a fifth of the increase in global energy supply to In many ways, BP's retreat from solar and wind power reflects how alternative energy — despite making strides globally — has lost some of its clout as major economies move to exploit fossil fuels.
It also raises questions about how BP — which once coined the phrase "Beyond Petroleum" as part of a corporate re-branding strategy — can sustain its once high-profile commitment to alternative energy.
They exited that entirely," Di Capua said. As climate change has slipped lower on the public policy radar, major economies have embarked on a quest to exploit more natural resources. In particular, the U. It knows that targets unveiled today will be used by investors and environmentalists to hold the company to account a decade from now. This wasn't the strategy the company followed in its "beyond petroleum" rebrand.
Then, its primary goal was to simply prevent emissions from further increases — a goal that it achieved handily, a compilation of company reports shows. Then-chief executive Lord John Browne himself, who famously spearheaded the new campaign, said that going "beyond petroleum" would be achieved "not by abandoning oil and gas — but by improving the ways in which it is used and produced so that our business is aligned with the long-term needs of the world.
Still, while investors might take BP at its word today that its sustainable energy do-over makes financial sense, they might not always. If the world does not follow the renewable energy transformation that BP is betting on, then investors might sour. What BP does then would be a true test of its commitment to today's targets. This is a BETA experience. You may opt-out by clicking here.
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